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Small startup businesses in the UK are facing a hiring roadblock due to a shortage of talent exacerbated by strict immigration laws which prevent businesses from hiring abroad.

“We’re seeing a shortage of talent,” said Russ Shaw, founder of Tech London Advocates. “We’d love to have a lot more home-grown talent, but we need to supplement that with global talent to build and grow these businesses.

“We need to adjust the immigration policies and many other things,” he said.

The Home Office requested a meeting with Shaw last month to discuss the problems facing the tech sector. The private meeting with the minister for immigration was welcomed by Shaw. It was also attended by a number of British entrepreneurs.

Off the back of the meeting, a Home Office working group has now been set up to go into more detail around some of the issues raised, and how to address the problem.

Shaw does not call for the UK to fling its doors wide open, admitting “that would be a free-for-all”, but he asks, “How can we make it easier?”

He said the entrepreneurs who attended the meeting are pragmatic business people, who may leave the UK if they cannot find the talent and funding to develop their ideas. Startups also cannot afford to pay the legal fees when immigration issues arise.

"There’s a huge skills shortage in tech and startups really struggle because we can’t afford the wages that the corporates can pay their employees," said Alastair Paterson, CEO of startup Digital Shadows. "There’s a shortage in an already limited pool – even in London – that everyone’s competing for.”

Eric van der Kleij, head of the L39 fintech accelerator and previously CEO of Tech City, said the government should invest money in creating experts who can teach young companies how to hire people from outside the UK.

“You have to have a reasonably robust system so it’s not abused,” said van der Kleij. “That means it has to be of some substance that a young company is able to grip it and do it, yet it’s the same system that a major corporation with massive resources can use – it’s a bit unfair.

“You can’t change the robustness of the system or it will be abused, but you should spend the money on helping younger companies use the system.”

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